The Comptroller and Auditor General (CAG) will carry out an “entrustment audit” of the three power distribution companies in Delhi for the entire period since 2002 when they signed their contracts.

Chief Minister Arvind Kejriwal met the CAG on December 31, and announced the following day that the national auditor would check the books of the discoms.

“The challenge of the audit will be to receive the huge volumes of digital data over an 11-year period and to make an assessment if the rate of purchase of power by them has been accurately reflected in their books of accounts,” CAG Shashi Kant Sharma told The Indian Express.

He said the companies were purchasing power in the free market at different prices per unit depending on a variety of factors, and the CAG would examine the digital data and assess how scientifically and correctly this was being done.

Sharma, who was defence secretary before taking over as CAG in May last year, said the CAG had the expertise and manpower to carry out audits in the information technology and power sectors. The three Delhi Discoms will be audited by six teams under the overall supervision of the Principal AG (Delhi); no timeframe has, however, been decided yet to complete the assignment.

The CAG said that even before Kejriwal met him, he had gone through Section 20 of the CAG Act which regulates the audit of accounts of authorities or bodies that are otherwise not subject to audit by the CAG. It is because of the provisions under Section 20 that a case in the Delhi High Court questioning the CAG’s jurisdiction to audit discoms does not stand, he said.

“Technically, since the Delhi government has a 49% stake in the companies, they cannot be subjected to a CAG audit but Section 20 allows us to undertake this in public interest and after giving an opportunity to the companies to make representations on the audit. Such entrustment audits involving private parties have been done in the past by the CAG also,” Sharma said.

The CAG said that it was clear to him during the meeting with Kejriwal that the chief minister was aware of the two requirements for the audit — an order from the lieutenant-governor and an opportunity to the discoms to make representations.

“The chief minister told me that notices had already been issued to the three private power companies and the order of the Delhi L-G came a day after our meeting,” Sharma said.

On whether this audit would open the floodgates for similar requests, the CAG said, “This is a standalone audit being done by us in public interest. We will examine all future requests on a case-by-case basis.”